Every now and then folks will propose a really sad resolution to a story in a game or in a TV series or other media. There is an idea that tragedy has some kind of moral weight -- that a tragic ending is powerful and therefore good.
Not all really sad endings are tragic, however. Most of them are melodramatic.
A tragic ending is a sad ending that is inevitable. In a well-crafted tragedy, it is the hero's tragic flaw that drives them to their inevitable destruction. King Lear is a tragedy: the King's blindness to the flaws of his daughters drives him to destruction. Macbeth is a tragedy: Lady Macbeth's vaulting ambition combined with her husband's inability to tell her to STFU causes him to violently take power in Scotland, and in so doing, amass a hoard of enemies he cannot possibly fight.
It's easy to imagine that if Lady Macbeth hadn't convinced Macbeth to destroy himself seizing power as King of Scotland, she would surely have got him to destroy himself in some other way. That's a tragic flaw. There is no avoiding it.
(A wiser wife would have told him to put off becoming King of Scotland as long as humanly possible. If the prophecy of his becoming king is true, then so long as he is not yet king, he cannot die!)
When you write a tragedy, everything sets up the horrible end. The seeds of the hero's destruction are in the first act -- the first reel, in a movie. Romeo and Juliet starts off by telling you that the two are "star-cross'd lovers."In other words, hey, don't get too attached to these kids.
A sad ending that is not foreshadowed, and does not proceed from a tragic flaw, is not a tragedy. It is melodrama.
Melodrama is not inherently bad. There are some very fine melodramas. Shakespeare's history plays are melodramas. However melodrama has no inherent tragic weight. It has to justify its own ending, because its ending is not inevitable.
By and large, tragedy is hard for Americans -- our national religion is optimism -- just as happy endings to dramas seem to be hard for the French to accept. Tragedy is particularly difficult in games: after I fought for 20-100 hours to do a thing, are you really going to tell me that I can't do it and my character is doomed? F u. Rage quit.
But just because it is hard, does not mean it is better. I did a bachelor's in Computer Science because it was hard. Not a good reason to do a major. (Though I did learn some good things about screenwriting.) Sure, life has a lot of sad endings. Sad endings are more "realistic." But fiction is naturalistic, not realistic. Fiction needs to be about something. Fiction is there to provide made-up worlds where made-up events add up and make sense.
You are not "selling out" by having a happy ending. You are not doing something amazing just by virtue of having a sad ending. Either ending needs to mean something. Either ending needs to be earned by the things that go before it in the story.
So next time someone proposes a sad ending, ask yourself if it's really "tragic." Is it foreordained by who the hero is? Or is it just a last-minute choice by the narrative folk, and the story would make just as much sense if the ending were happy.
In that case, you have my blessing to choose a happy ending.